group financial results 2q 2016 - allianz.com€¦ · 2016 group financial results 2q 2016 group:...

2Q 2016

Media conference call

August 5, 2016

Oliver Bäte / Dieter Wemmer

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1 1 CEO assessment and outlook Oliver Bäte

2 Group financial results Dieter Wemmer

3 Glossary

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CEO assessment and outlook

Solid first half in difficult environment

Total revenues

Total revenues down 4.7%

vs. prior year mainly driven

by successful mix shift in L/H

6M 15 67.9

6M 16 64.8

in EUR bn in % of full year outlook mid-point

49%

Operating profit

Operating profit at EUR 5.1bn

More than EUR 500mn

impact from NatCat in 1H

in % of full year 2015

50%

S/h net income

S/h net income at EUR 3.3bn

represents 50% of full year

2015 number

Loss on planned Korea sale

already included

Operating profit outlook of EUR 10.5bn plus/minus EUR 500mn confirmed

Strong capitalization with Solvency II ratio of 186% despite all-time low interest rates

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3 Glossary

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Group: solid first half in volatile environment

5

Group financial results 2Q 2016

AM

Total revenues (EUR bn) vs. prior year

64.8 (-4.7%) 28.9 (-1.1%) 33.0 (-7.2%) 2.8 (-9.4%)

Operating profit (EUR mn) vs. prior year

5,1091 (-10.3%) 2,539 (-16.2%) 1,9361 (-1.0%) 961 (-9.3%)

S/h net income

(EUR mn)

Combined ratio

(in %)

New business margin3

(in %)

Cost-income ratio

(in %)

6M 15 6M 16

94.9 94.1

+0.8%-p

6M 15 6M 16

2.6

1.5

+1.0%-p

6M 15 6M 16

66.0 66.0

0.0%-p

6M 15 6M 16

3,284 3,839

-14.5%

Group AM L/H P/C

NatCat impact2

Run-off ratio

3.3%

1.5%

5.0%

2.3%

-84.7 -28.2

1) Total 2Q 16 result of the Korean life business considered as non-operating since it has been classified as held for sale

2) NatCat costs (without reinstatement premiums and run-off)

3) Current and prior year figures are presented excluding the effects from the Korean life business

3rd party net flows (EUR bn)

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Group: solid first half in volatile environment

6

Comments

Revenues – selected growth

Revenues driven by strategic product shift

in L/H (reduction of traditional product

sales) and a decrease at PIMCO.

P/C with strong internal growth of 3.1%.

Operating profit – at target

Operating profit of EUR 5.1bn at 49%

of FY OP outlook mid-point.

P/C – NatCat and large losses

Operating profit development impacted by

an accumulation of higher NatCat, weather-

related claims and large losses, only partly

offset by higher run-off. Last year includes

EUR 0.2bn positive one-off from FFIC

personal lines sale. OP of EUR 2.5bn at

46% of FY OP outlook mid-point.

L/H – excellent

Strategic product shift results in significant

improvement of NBM. Operating profit of

EUR 1.9bn at 54% of FY OP outlook mid-point.

Asset Management – stabilizing

Operating profit below previous year, but up

quarter on quarter in 2016. Bulk of performance

fees expected in second half of the year.

Net income – at 50% of full year 2015

1H 2015 at exceptionally high level. Compared

to full-year 2015 first half of 2016 reaches 50%

despite headwinds, including classification of

Korea as held for sale. As already indicated in

1Q 2016, the accounting impact of Korea

reduces net income by EUR 352mn in 2Q 2016.

Outlook 2016 – confirmed

Full year operating profit outlook of EUR 10.5bn

plus/minus EUR 500mn confirmed.

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Group: lackluster result overshadows strategic progress

1) Internal growth of +0.4%, adjusted for F/X and consolidation effects


7

2Q 15 2Q 16

2Q 15 2Q 16

Total revenues (EUR bn)

Shareholders’ net income (EUR mn)

Operating profit drivers (EUR mn)

30.2 29.4

-2.5%1

2,018

1,090

-46.0%

2Q 16 1,099 1,009 498 -249 -5

2Q 15 1,745 853 505 -230 -32

P/C

2,842

2,353

-17.2%

Operating

profit

2Q 15

Operating

profit

2Q 16

L/H AM CO Conso.

-646

+156

-7 -20

+28

Δ 2Q 16/15

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Group: lackluster result overshadows strategic progress

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Comments

Revenues – internal growth of +0.4%

Internal growth in P/C accelerates to +3.7%.

L/H shows good growth in capital-efficient

products, total revenues down due to lower

sales of traditional products. AM down but

increasing compared to 1Q 2016.

P/C – 94% CR target unchanged

Operating profit impacted by higher NatCat,

weather-related claims and large losses.

Non-repetition of EUR 0.2bn net FFIC gain.

L/H – strategic shift pays off

Strong operating profit driven by investment

margin and change in DAC. Result of Korea

considered as non-operating since Korea

has been classified as held for sale.

Asset Management – back on track

Adjusted for F/X effects operating profit stable

versus last year and higher than 1Q 2016.

Net income – distorted in 2Q 2016

Driven by lower operating profit, reduced net

realized gains and EUR 352mn negative impact

of Korea.

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Group: balance sheet in good shape


1) Off-balance sheet unrealized gains on real estate, associates and joint

ventures attributable to the shareholders amount to EUR 2.8bn as of

31.12.15, EUR 2.7bn as of 31.03.16 and EUR 2.7bn as of 30.06.16

2) Including F/X

Key sensitivities (EUR bn) Shareholders’ equity

(EUR bn)

Unrealized

gains/losses1

Retained earnings2

Paid in capital

31.12.15 31.03.16 30.06.16

67.4 67.7

28.9

24.7

13.8

28.9

23.3

10.9

-2.7

-3.3

-4.0

-4.5

+3.1

on gov. bonds

on other bonds

Credit spread

+100bps

-50bps

+50bps Interest

rate

Equity

markets -30%

3) Changed regulatory tax treatment of German life sector reduced year-end

SII ratio from 200% to 196% on January 1, 2016

4) Second order effects to other risk types and to own funds transferability

restrictions are not considered

+30%

-30%

SII capitalization3 (in %)

Key sensitivities4

31.12.15 31.03.16 30.06.16

0%-p

186 186

+8%-p

+7%-p

-7%-p

-12%-p

-14%-p

-10%-p

+50bps

-50bps

Interest rate

SII non-parallel

Equity

markets

on gov. bonds

on other bonds

Credit spread

+100bps

200

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16.6

22.2

28.9

63.1

+0.5%

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Group: balance sheet in good shape

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Comments

Shareholders’ equity further up

In 2Q 2016, net income (EUR 1.1bn),

higher net unrealized gains (EUR 2.8bn)

and positive F/X effects (EUR 0.2bn)

slightly overcompensate the dividend

payment (EUR -3.3bn) and higher actuarial

losses for defined benefit pension plans

(EUR -0.3bn).

Solvency II ratio stable – supported by

management actions

Solvency II own funds and SCR supported

by conservative positioning in preparation

for a potential Brexit (e.g. currency and

sovereign spread hedging, reduction of

European banking exposure). Lower

interest rates and equity markets were

compensated by credit spread movements,

capital generation and other effects.

Sensitivities – basically unchanged

The sensitivity to a 50bps decrease of interest

rates remained at -12%-p. Credit spread

sensitivities are slightly up versus 1Q 2016

due to increased market values of bonds.

Attractive dividend policy

50% of shareholders’ net income have been

accrued for dividend.

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Group: solid pre-tax operating capital generation

1) Including cross effects and policyholder participation

2) Other effects on SCR include diversification effects and third country equivalence

SCR (EUR bn)

37.3

Business

evolution

Other2 31.03.16

38.0

30.06.16 Regulatory /

model changes

-0.1

+0.5

Market

impact1

+0.1

Management

actions

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36.4

31.12.15

0.0

+0.2

SII capitalization 186% 186% +4%-p

Pre-tax operating

capital generation

Own funds (EUR bn)

Operating SII

earnings

Market

impact

Regulatory /

model changes

Other

70.6 69.3

31.03.16 30.06.16

+0.3

0.0

+0.5

+1.2 +0.5

-0.5

+0.2

-0.7

Dividends /

capital mgmt.

+0.4

-0.7

72.7

31.12.15

200%

0.0

P/C

L/H

AM

CO/Conso.

+1.7 0.0

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Group: solid pre-tax operating capital generation

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Comments

Market impact

Conservative positioning in preparation for

a potential Brexit helped to keep own funds

stable in a volatile market environment.

SCR movement mainly driven by higher

equity and underwriting risks.

Capital management / management

actions

Own funds impact includes EUR 0.55bn

dividend accrual. Management actions

driven by hedging activities.

Other

Positive own funds impact from life entities

mainly driven by valuation differences that

are not already reflected in respective

MCEV changes. Taxes EUR -0.8bn.

Sale of Korea not considered

The expected positive effect of the sale of

our Korean life entity on our SII ratio and its

sensitivity is not included in the 2Q 2016

numbers yet.

Solid pre-tax operating capital generation

Adjusted for market effects, capital

management activities and other our

Solvency II ratio shows a pre-tax increase of

+4%-p after +9%-p in 1Q 2016.

Operating SII earnings

P/C and AM are close to their operating

results. The L/H contribution is lower than

in 1Q 2016 due to a negative impact from

operating variances and assumption

changes.

Business evolution

Ongoing business mix change towards

capital-efficient products in L/H keeps net

SCR expansion at very moderate level.

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2Q 2016 Revenues Total

growth

Δ p.y.

Internal

growth

Δ p.y.

Price

effect

Volume

effect

Total P/C segment 11,611 -2.0% +3.7% +0.7% +3.0%

Large OEs Germany 1,811 +3.2% +3.2%

Italy 1,147 -4.7% -4.7%

France 947 +3.7% +3.7%

Global lines AGCS 1,792 -14.6% -3.5%

Allianz Worldwide Partners 888 +4.3% +9.1%

Credit Insurance 532 -7.5% -5.1%

Selected OEs Australia 772 -1.5% +4.9%

United Kingdom 700 -13.4% -5.6%

Spain 550 +6.3% +6.3%

Latin America 495 -10.7% +16.6%

P/C: internal growth accelerates to +3.7% in 2Q (EUR mn)


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P/C: internal growth accelerates to +3.7% in 2Q

14

Comments

AGCS – profitability over volume

Re-underwriting initiatives impact top-line.

AWP – accelerating growth in 2Q

Sales rebound strongly in 2Q despite a

continued difficult global economic and

geopolitical climate, exacerbated by increasing

competition.

Australia – excellent growth

Broad-based growth driven by retail business

mainly in motor and assistance.

UK – positive price effect offset by volume

Premiums below prior year due to exit from

direct channel and continuing underwriting

actions in retail motor.

Spain – excellent growth continues

Price- and volume-driven growth.

Both, personal and commercial lines grow

in excess of 5%, outgrowing the market.

LatAm – Argentina in the driving seat

Motor business in Argentina main growth

driver while Brazil hampered by recession

and impacted by portfolio cleaning in health.

Strong growth continues

Internal growth of +3.7% driven by volume

(+3.0%) and price (+0.7%). F/X -3.8% and de-

consolidations -1.8% lead to -2.0% top-line

decline. Adjusted for FFIC retail fronting for ACE

in 2015, retention +0.5%-p to 91.3%. 6M rate

change on renewals +1.3%.

Germany – very good growth continues

Volume and price increases in motor main driver

of very good growth, supported by non-motor

retail. New business rises +11.9%.

Italy – motor remains difficult

With a -6.9% decline in a weak market,

motor business is main culprit behind top-line

development. Non-motor -0.4% in 2Q.

Pure direct +5.9% in 2Q against a negative

market (as per 3M 2016).

France – recovery in commercial lines

Continued good growth in personal and strong

recovery in mid-corp lead to above-market

growth in 1H. Growth overall volume-driven.

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2Q 15 2Q 16

2Q 15 2Q 16

P/C: underwriting result suffers from NatCat, weather & large

losses

1) Including policyholder participation

2) NatCat costs (without reinstatement premiums and run-off): EUR 122mn (2Q 15) and EUR 501mn (2Q 16)


Combined ratio (in %)

96.4 93.5

Run-off ratio (in %)

65.7

27.8

6.5

3.4

1,745

68.1

28.4

1.1 4.4


-345 -77 1,099

-225

2Q 16 350 766 -16

2Q 15 694 843 208

Operating

profit

2Q 16

Other Operating

profit

2Q 15

Investment1 Underwriting

Δ 2Q 16/15

-37.0%

+2.9%-p

+3.2%-p

Loss ratio

Expense ratio

NatCat impact2 (in %-p)

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P/C: underwriting result suffers from NatCat, weather & large

losses

16

Comments

Run-off – very high

Very high at EUR 750mn/6.5% with

contribution spread across many OEs.

Last year’s run-off of EUR 388mn/3.4%

negatively impacted to the tune of -1.2%-p

by reserve strengthening for former FFIC

portfolio. 1H run-off of 5.0% above

10-year 1H average.

AY LR – higher NatCat and large losses

AY LR +5.5%-p mainly due to higher NatCat

(∆ +3.3%-p), large losses (∆ +1.3%-p) – in

particular in Germany and France –, and

weather (∆ +0.2%-p). Delayed improvements

in LatAm.

Expense ratio

Increase of +0.6%-p driven by higher

acquisition expenses (business mix change).

Operating profit – strong NatCat impact

and non-repetition of FFIC net gain

OP EUR -0.6bn lower driven by higher

NatCat (∆ EUR -0.4bn), higher large losses

(∆ EUR -0.1bn), non-repetition of EUR 0.2bn

FFIC net gain from sale of personal

insurance to ACE in 2Q 2015 and lower

investment result (∆ EUR -0.1bn).

1H OP of EUR 2.5bn at 46% of FY OP

outlook mid-point.

Claims environment – extreme

NatCat losses of EUR 0.5bn/4.4%-p almost

twice the 2Q average of the last 10 years.

European floods and storms with EUR 0.3bn

in terms of losses.

1H level of EUR 0.5bn/2.3% broadly in line

with average historic experience.

Large losses in 2Q above prior year as well

as above 5-year average.

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2Q 2016 Operating

profit Δ p.y.

Combined

ratio

Δ p.y.

NatCat

impact

in CR1

Δ p.y.

Total P/C segment 1,099 -37.0% 96.4% +2.9%-p 4.4%-p +3.3%-p

Large OEs Germany 126 -67.3% 99.7% +13.4%-p 8.1%-p +8.4%-p

Italy 221 -16.0% 86.2% +0.4%-p 0.0%-p 0.0%-p

France 54 -59.1% 101.7% +6.4%-p 7.4%-p +7.4%-p

Global lines AGCS 6 -97.4% 110.4% -0.5%-p 14.8%-p +9.4%-p

Allianz Worldwide Partners 45 +46.3% 96.1% -0.9%-p 0.0%-p 0.0%-p

Credit Insurance 92 -25.0% 83.2% +7.5%-p – –

Selected OEs Australia 91 +13.1% 91.9% -3.4%-p 0.0%-p -8.8%-p

United Kingdom 38 +3.3% 96.6% -1.8%-p 0.0%-p -0.8%-p

Spain 55 -8.0% 90.9% -0.1%-p 0.0%-p 0.0%-p

Latin America -9 n.m.2 109.4% -2.5%-p 0.0%-p 0.0%-p


P/C: high NatCat impact in many flagship OEs (EUR mn)

17

1) NatCat costs (without reinstatement premiums and run-off)

2) Operating profit in Latin America increased by EUR 13mn from EUR -22mn in 2Q 15 15

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P/C: high NatCat impact in many flagship OEs

18

Comments

Germany – high NatCat and large losses

AY LR increases +11.7%-p mainly as a result of

higher NatCat and large losses. Adjusted for

extraordinary effect in 2Q 2015 ER basically

flat.

Italy – CR remains at outstanding level

Run-off above last year’s level, offset by higher

attritional loss ratio. Latter mainly driven by

lower average premiums in MTPL. Genialloyd

CR good at 93.9%.

France – impacted by NatCat

NatCat losses of EUR 0.1bn (floods & hail) as

well as large losses are main driver of CR

increase. Development exacerbated by

increased attritional claims frequency in

property.

AGCS – heavy loss quarter

Significant negative impact from higher NatCat

while weather-related and large losses are also

higher than last year. Effects partly offset by

higher run-off. Last year’s OP was boosted by

net gain from sale of FFIC’s personal lines

business to ACE to the tune of EUR 0.2bn.

Australia – strong CR improvement

Lower NatCat and large losses are main

reason for CR improvement. Run-off below

last year.

UK – good performance in commercial

CR improvement driven by lower underlying

LR, largely offset by higher large losses.

Both, commercial and retail business with

CRs below 100%.

Spain – CR remains excellent

CR largely flat as better large claims are offset

by higher attritional frequency and severity in

motor as well as weather-related losses.

LatAm – restructuring ongoing

Macro environment continues to be

challenging. Brazil CR of 113.7% still

unsatisfactory, but LR and CR showing

meaningful improvements compared to

2Q 2015 as well as 1Q 2016. OP EUR -9mn

vs. EUR -26mn last year. CR in Argentina

improves slightly to 107.7% vs. 2Q 2015.

OP EUR -2mn vs. EUR -3mn last year.

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P/C: interest & similar income lower

Operating investment result1,2 (EUR mn)

Interest &

similar income4 972 864 -108

Net harvesting

and other5 -35 -10 +25

Investment

expenses -94 -87 +7

Total average

asset base2,3

(EUR bn)

Δ 2Q 16/15 2Q 15 2Q 16

766 843

-9.1%

110.9 114.2

2Q 16

2Q 15

Current yield (debt securities; in %)

0.74

0.67

Reinvestment yield6 (debt securities; in %)

2Q 16

2Q 15 2.2

2.1

2Q 16

2Q 15

3.8

5.0

4.1

5.3

Duration7

5) Comprises real. gains/losses, impairments (net), fair value option,

trading and F/X gains and losses and policyholder participation

6) On an annual basis

7) For the duration calculation a non-parallel shift in line with Solvency II yield

curves is used. Data excludes internal pensions residing in the P/C segment

1) Including policyholder participation

2) Effective 2016, fixed assets of renewable energy investments are disclosed as

investments. Prior year figures have been restated accordingly

3) Asset base includes health business France, fair value option and trading

4) Net of interest expenses

Economic reinvestment yield

1.9

2.0

Liabilities

Assets

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P/C: interest & similar income lower

20

Comments

Interest and similar income

Current income down mainly driven by lower

income on debt. This is primarily the result of

lower yields, exacerbated by a lower asset

base. The latter is partly the result of capital

upstreaming initiatives last year.

Net harvesting & other

F/X result net of hedges higher than last

year mainly due to emerging markets

F/X development.


Alternative calculation methodology

incorporates long-term F/X costs.

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L/H: new business strategy on track


PVNBP share by line1

Protection & health

Guaranteed

savings &

annuities

Unit-linked

w/o guarantees

Capital-efficient

products

NBM (in %)

2Q 15 2Q 16

-0.2

1.6

2.2

5.7

1.5

2.5

2.6

5.4

36%

28%

26%

28%

42%

19%

11% 11%

Germany Life

3,772 (+18.5%)

Asia Pacific

763 (-42.9%)

France

1,471 (-2.1%)

Italy

1,915 (-31.9%)

Other OEs

1,096 (-10.6%)

PVNBP by OE1

USA

3,389 (+34.2%)

Benelux

515 (+11.7%)

EUR mn 2Q 15 2Q 16 Δ p.y.

PVNBP 13,606 13,240 -2.7%

Single premium 9,132 8,796 -3.7%

Recurring premium 671 643 -4.0%

APE 1,584 1,523 -3.8%

Total L/H segment 1.5 2.6 Spain

318 (-42.8%)

Operating entity

PVNBP in EUR mn (Δ p.y.)

21 1) Current and prior year figures are presented excluding the effects from the Korean life business 19

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L/H: new business strategy on track

Comments

PVNBP by OE

GER Life – Protection & health up 30%

Market share in risk riders with 28% at new

high (1Q 2016). Capital-efficient products up

47% with share in new business increasing

by 10%-p to 54%.

USA – FIA and hybrid VA on the rise

PVNBP increase of 34% driven by capital-

efficient products, i.e. FIA (EUR +0.8bn due to

marketing campaign) and hybrid VA product

“Index Advantage” (EUR +0.2bn with

NBM 2.4%).

Italy – UL share at 76%

New business volumes also affected by

repricing of traditional business (EUR -0.5bn).

Taiwan – UL business volatile

Market conditions weigh on sentiment

for UL (EUR -0.6bn).

Benelux – UL drives growth

Increase of UL production (EUR +0.1bn)

in Luxembourg.

PVNBP share by line

Continuing improvement of business mix

PVNBP of guaranteed savings & annuities was

reduced by 24%, whereas PVNBP of all other

three lines increased by 9%. As a result total

PVNBP was almost stable (-2.7%). Share of

capital-efficient products up 14%-p to 42% with

PVNBP +47%. Repricing, business mix change

and higher interest rates lead to enhancement

of NBM by 1.0%-p to 2.6%.

Three lines with much better NBM

Capital-efficient products with improved margins

but below 1Q (3.3%), mainly due to adverse

market development in the US. Guaranteed

savings & annuities with 1.7%-p improvement

and further product actions underway.

Protection & health remains very profitable.

NBM UL w/o guarantees improved by 0.4%-p

with RoRC (6M 2016) at 39% due to low

capital intensity.

Strong net flows

Net flows excluding Korea at EUR 2.7bn – mainly

from capital-efficient products – add 0.5% to

operating asset base.

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L/H: operating profit strong at EUR 1 billion (EUR mn)


Operating profit by source1

2Q 16 0 1,343 1,011 -1,628 198 87

2Q 15 -94 1,364 933 -1,570 267 -47

Δ 2Q 16/15 excl. Korea

Operating

profit

2Q 15

Operating

profit

2Q 16

Loadings

& fees

Investment

margin

Expenses Technical

margin

Impact of

change

in DAC

1,009

853 +94

+77

-70 -58

+134

+18.3%

1) Prior year figures changed in order to reflect the roll out of profit source reporting to China

2Q 15 2Q 16

+18.3%

1,009 853

462

187

94

545

190

82 205

192

Operating profit by line1

Protection & health

Guaranteed savings & annuities

Unit-linked w/o guarantees

Capital-efficient products

23

-21

Operating

profit

Korea

Operating profit Korea

-94

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L/H: operating profit strong at EUR 1 billion

Comments

Korean 2Q results reclassified

Total 2Q 2016 result of Korea considered as

non-operating since Korea has been classified

as held for sale.

1H OP at 54% of FY target range mid-point

1H 2016 operating profit of EUR 1.9bn

at excellent level.

Loadings & fees – new business mix

Decline mainly due to lower UL sales in Italy.

Investment margin – Germany Life up

Investment margin in Germany Life up by

EUR 169mn due to higher result of fixed

income derivatives and a normalization of

PHP. US traditional VA declines EUR 81mn

from exceptionally strong 2Q 2015.

Expenses driven by USA and Germany Life

Higher PVNBP in US (EUR +0.8bn), mainly

driven by FIA, and more single premium

business in Germany Life (PVNBP up

EUR +0.6bn).

Technical margin – France

Lower result from France (EUR -48mn)

impacted by one-off charges and changes in

labor law affecting the protection and health

business. Lower contribution from Switzerland

(EUR -11mn).

Impact of change in DAC – USA

Driver is USA (EUR +122mn). Strong new

business triggers higher DAC capitalization.

Lower amortization of VA DAC partially offsets

decline in investment margin (less favorable

interest rate development).

Protection & health

Lower result from technical margin in France

(EUR -29mn) partially offset by improvement

in CEE (EUR +12mn).

UL w/o guarantees – Italy

Lower loadings and performance fees in Italy.

Guaranteed savings & annuities – GER Life

Improved investment margin Germany Life

(EUR +145mn) main driver.

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L/H: VNB up 62 percent (EUR mn)

2Q 2016 VNB1 Δ p.y. NBM1

Δ p.y. Operating

profit Δ p.y.

Total L/H segment 341 +62.2% 2.6% +1.0%-p 1,009 +18.3%

Large OEs Germany Life 105 +257.4% 2.8% +1.9%-p 261 +174.1%

USA 79 +21.9% 2.3% -0.2%-p 234 -21.3%

Italy 36 +24.1% 1.9% +0.8%-p 81 -20.3%

France 15 +255.8% 1.0% +0.8%-p 148 -10.3%

Selected OEs Asia Pacific 39 -24.9% 5.2% +1.2%-p 47 n.m.2

Switzerland 1 -71.0% 0.5% -0.9%-p 21 -13.0%

Germany Health 7 +81.3% 1.8% +0.7%-p 37 -32.8%

Benelux 5 n.m.3 0.9% +1.9%-p 40 +16.2%

Spain 16 n.m.4 5.1% +5.2%-p 49 +0.1%

Turkey 14 +99.1% 7.4% +4.5%-p 15 +11.7%


2) Total 2Q 16 result of the Korean life business considered as non-operating since it has been classified as held for sale

3) Value of new business in Benelux increased by EUR 9mn from EUR -5mn in 2Q 15

4) Value of new business in Spain increased by EUR 17mn from EUR -1mn in 2Q 15


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L/H: VNB up 62 percent

Comments

Germany Life – better investment margin Investment margin improved by EUR 169mn due to higher result of fixed income derivatives and normalization of high PHP in 2Q 2015.

Introduction of new model for calculation of technical provision is expected to lift NBM of Germany Life in 3Q. Main change is better reflection of product features of capital-efficient products.

Italy – less investment margin and fees Lower level of capital gains and performance fees.

Germany Health – investment margin Investment margin (∆ EUR -16mn) impacted by impairments on equities.

Benelux – Belgium health business Operating profit benefits from strong performance of Health business in Belgium.

Management actions lead to better NBM Impact from business mix change accounts for +0.6%-p. 4th consecutive quarter with NBM ≥2.5%.

Higher NBM drives VNB VNB 13% ahead of avg. quarterly VNB 2015.

Main OEs with higher NBM Germany Life NBM benefits from new tariffs and growth in capital-efficient products. Italy NBM enhances due to better business mix. NBM Asia Pacific at outstanding level of 5.2% with strong contribution from Indonesia and Malaysia. NBM USA impacted by lower interest rates and higher volatilities, partially offset by changes in product features in FIA and business shift to hybrid VA products.

USA – operating profit still at strong level Stable result from FIA offset by lower contribution from VA business (∆ EUR -60mn) due to less favorable interest rate movement.

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L/H: healthy investment margin of 25bps


(yields are pro-rata)

Based on Ø book value of assets2 2Q 151 2Q 161

Current yield3 1.0% 0.9%

Based on Ø aggregate policy reserves

Current yield3 1.2% 1.1%

Net harvesting and other 0.0% 0.0%

Total yield 1.2% 1.1%

- Ø min. guarantee4 0.6% 0.5%

Gross investment margin (in %) 0.6% 0.6%

- Profit sharing under IFRS5 0.4% 0.4%

Investment margin (in %) 0.2% 0.2%

Investment margin (EUR mn) 933 1,011

Ø book value of assets2 (EUR bn) 489 507

Ø aggregate policy reserves (EUR bn) 395 407

2Q 15 2Q 16

Reinvestment yield1,6 (debt securities; in %)

2.3

2.8

Duration7

Liabilities Assets

2Q 15 2Q 16

10.2 8.9 9.5 8.7


2.1


2) Asset base under IFRS which excludes unit-linked, FVO and trading

3) Based on interest and similar income (net of interest expenses)

4) Based on technical interest

5) Includes bonus to policyholders under local statutory accounting and deferred premium refund under IFRS

6) On an annual basis

7) For the duration calculation a non-parallel shift in line with Solvency II yield curves is used. Data excludes internal pensions residing in the L/H segment

2.6

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L/H: healthy investment margin of 25bps

28

Comments

Current yield decline as expected Current yield based on aggregate policy reserves down 10bps due to lower income from fixed income and equities. Seasonal volatility of dividend payments from private equity investments is major reason for declining income from equities. Average minimum guarantee drops 2bps.

Net harvesting and other – normal level Result of 4bps is close to normal level. Lower net capital gains more than compensated by higher result from favorable market movements.

Investment margin remains strong Investment margin strong at 25bps (+1bp). 2016 YTD investment margin at 48bps. Normal full-year level (excluding Korea) approx. 90bps.

Investment margin > EUR 1bn 3% higher reserve base and 5% better investment margin lead to a plus of 8% in absolute terms.

PHP ratio slightly down PHP (-2%-p) normalizes from high level in 2Q 2015.

Reinvestment yield Almost stable compared to 1Q 2016 (2.2%). Alternative calculation methodology incorporates long-term F/X costs.

Duration gap slightly higher vs. 1Q 2016 Slightly higher duration gap vs. 1Q 2016 (+0.1) driven by market development. Duration gap vs. 2Q 2015 widened mainly due to negative impact from EIOPA curve update in 4Q 2015.

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AM: 3rd party AuM up 5 percent (EUR bn)

29

EUR bn -1.1 -18.0 23.7 28.5 31.4

31.12.15 31.03.16 30.06.16

1,307

524

1,830

1,276

487

1,763

∆ total AuM

1,242

507

+3.8%

1,750

+4.6%

∆ 3rd party AuM +2.4%

+5.2%

Allianz Group

assets

3rd party AuM

31.03.16 30.06.16 F/X

impact

Market &

dividends PIMCO AllianzGI

Other

+5.2%

-1.4% -0.1%

+1.9% +2.3%

Net flows

1,242 1,307 +2.5%

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AM: 3rd party AuM up 5 percent

30

Comments

PIMCO – net outflows 3rd party net outflows (EUR 18bn) reduced versus 2Q 2015 (EUR 29bn), but increased compared with 1Q 2016 (EUR 10bn). Mutual fund flows almost flat. Expected strategic asset re-allocation of a few large institutional customers crystallized in larger negative flows in April. May and June in line with trend of continuously declining net outflows.

AllianzGI – marginal net outflows 3rd party net inflows in Europe and Asia Pacific but outflows in the US, overall EUR -1bn due to volatile equity markets. Mutual fund flows flat.

Segment – 3rd party AuM up 5% Increase driven by first time consolidation of Rogge Global Partners, appreciation of the USD (1.11 USD/EUR end of 2Q 2016, 1.14 USD/EUR end of 1Q 2016) and favorable bond markets.

PIMCO – 3rd party AuM up 3% Increase from EUR 963bn end of 1Q 2016 to EUR 995bn end of 2Q 2016 due to F/X and favorable bond markets, more than compensating net outflows.

AllianzGI – 3rd party AuM up 12% First time consolidation of Rogge Global Partners (impact: EUR 31bn) drives increase of 3rd party AuM from EUR 279bn end of 1Q 2016 to EUR 311bn end of 2Q 2016. Positive F/X effects, small net outflows.

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2Q 15 2Q 16

2Q 15 2Q 16

-7.0%

PIMCO3

1,108 1,010

-8.9%

24 35

28

418 391

Other net fee and

commission income

(AuM driven fees)

Performance fees

Revenues development1 Internal growth

-5.8%

Internal growth

+0.6%

2Q 15 2Q 16

1,364 AllianzGI4

444 448

40

+0.9%

1,507

1,088 975

52 1,440

1,548

1) “Other” AM revenues of EUR -10mn in 2Q 15 and EUR 1mn in 2Q 16 are not shown in the chart

2) Excluding performance fees and other income, 3 months

3) “Other” PIMCO revenues of EUR -4mn in 2Q 15 and EUR 0mn in 2Q 16 are not shown in the chart

4) “Other” AllianzGI revenues of EUR -2mn in 2Q 15 and EUR 18mn in 2Q 16 are not shown in the chart


Internal growth

-7.1%

AM: 2Q margin below PY, but slightly better than in 1Q 2016 (EUR mn)

3rd party AuM

margin2 (in bps)

53.8 50.2

42.7 41.3

39.6 38.7

74

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AM: 2Q margin below PY, but slightly better than in 1Q 2016

32

Comments

Segment – lower operating revenues Compared with 2Q 2015, lower average 3rd party AuM (-7%) and reduced 3rd party AuM margins (-1.4 bps) lead to lower AuM driven revenues (-9%). Decrease mitigated by higher performance fees. Impact from first time consolidation of Rogge end of May negligible.

PIMCO – lower AuM driven revenues Lower average 3rd party AuM (-9%) as well as a reduced 3rd party AuM margin cause the decrease of revenues (-9%). Performance fees up. A higher level is expected for 2H 2016.

AllianzGI – higher revenues Higher performance fees and a one-off item in other revenues lead to increase in operating revenues (+1%).

PIMCO – 3rd party AuM margin up versus 1Q 2016 Current margin (38.7 bps) higher than in 1Q 2016 (38.2 bps). Decrease versus 2Q 2015 due to outflows from mutual fund business with above-average margin.

AllianzGI – 3rd party AuM margin stable versus 1Q 2016 Current margin (50.2 bps) stable compared with 1Q 2016 (50.1 bps). Reduction versus 2Q 2015 (53.8 bps) mainly driven by technical items with an impact of ~1.9 bps, e.g. a reclassification of revenue components from AuM driven fees to other revenues. Additional impact from lower share of equity and mutual fund business.

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Internal growth

-0.1%

F/X impact -23 -1 0 +9 +7 0 CIR

2Q 16 1,364 74 1 -557 -382 -2 65.4%

2Q 15 1,507 52 -10 -624 -419 0 67.4%

Operating

profit

2Q 16 Performance

fees

Operating

profit

2Q 15 Margin2 Volume2


4981

Other

PIMCO

AllianzGI

396

384

137

-1.4%

69.4%

62.0% 64.3%

68.7%

Revenues Expenses

Personnel

Non-

personnel

CIR

F/X

effect

-66

-53

+57

+24 +12 -8

5051

364

2,740

1) Including operating loss from other entities of EUR -29mn in 2Q 15 and EUR -23mn in 2Q 16

2) Calculation based on currency adjusted average Allianz AuM / Allianz AuM driven margins and

based on currency adjusted average third party AuM / third party AuM driven margins

PIMCO

AllianzGI 139

+30


Re-

structuring

-2

AM: stable operating profit

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AM: stable operating profit

34

Comments

Segment – OP 8% above 1Q 2016 OP 8% above level in 1Q 2016 and, F/X adjusted, 0.2% higher than in 2Q 2015. Development versus 2Q 2015 indicates successful cost management: Operating expenses -10%, operating revenues -7%, leading to a significantly improved CIR (-2%-p).

PIMCO – F/X adjusted OP stable OP improved by 9% versus 1Q 2016 and – F/X adjusted – only 1% lower than previous year’s second quarter, driven by significant reduction of personnel costs (F/X adjusted -14%). CIR 2%-p better than 1Q 2016 and 2Q 2015.

AllianzGI – OP 15% above 1Q 2016 OP significantly better than in previous quarter, which was adversely impacted by turbulent equity markets. Improvement supported by a technical one-off item. Consolidation of Rogge Global Partners on May 31 impacted quarter only negligibly.

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CO: operating result in line with expectations (EUR mn)

Operating loss development and components

-230 -14 -8

+3

Operating

result

2Q 16

Alternative

Investments

Consoli-

dation

Operating

result

2Q 15

Banking Holding &

Treasury

-249

Δ 2Q 16/15

2Q 16 -278 17 11 0

2Q 15 -264 26 8 0

+8.5%


35

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CO: operating result in line with expectations

36

Comments

Operating profit

1H result, adjusted for one-offs, leaves

us fully in line with full year outlook.

Holding &Treasury – slightly down

Main drivers are slightly higher

administrative expenses and a

lower net interest result.

Banking – lower operating profit

Driven by higher bank levies and

slightly lower net interest income

in Italy and Germany.

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Group: shareholders’ net income and non-operating result (EUR mn)


37

2Q 15 2Q 16 Change

Operating profit 2,842 2,353 -489

Non-operating items 137 -573 -710

Realized gains/losses (net) 424 267 -157

Impairments (net) -43 -383 -339

Income from fin. assets and liabilities carried at fair value (net) 13 28 +15

Interest expenses from external debt -213 -211 +2

Fully consolidated private equity inv. (net) -6 0 +6

Acquisition-related expenses 3 0 -3

Amortization of intangible assets -41 -28 +12

Reclassifications 0 -246 -246

Income before taxes 2,979 1,780 -1,199

Income taxes -867 -595 +272

Net income 2,112 1,185 -927

Non-controlling interests 94 95 0

Shareholders’ net income 2,018 1,090 -928

Effective tax rate 29% 33% +4%-p

Total impact Korea

on net income:

EUR -352mn

5

-209

-247

+100

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Korea distorts result

Following the sales-agreement for our

Korean Life Insurance subsidiary

(subject to regulatory approval)

the entity was classified as held for sale.

Therefore, the Korean result, including

the accounting impact from disposal,

is now shown in non-operating.

Non-operating result

Negative result largely driven

by Korean reclassification.


Group: shareholders’ net income and non-operating result

38

Comments

Tax rate

Lower tax exempt capital gains and higher non-

tax deductible equity impairments than in

2Q 2015 result in higher effective tax rate.

Limited benefit from Korean loss due to low

Korean corporate tax rate of 22%.

Shareholders’ net income

Shareholders’ net income reflects lower

operating profit (NatCat, absence of FFIC gain),

reduced net realized gains and negative impact

of Korea (EUR 352mn, as already announced in

1Q 2016). Half-year shareholder’s net income

of EUR 3,284mn at 50% of last year’s result.

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Status quo and ambitions for 2018

RoE Allianz Group

EPS Growth

P/C CR

L/H NBM

L/H OEs with

RoE ≥10%

PIMCO CIR

SII interest rate

sensitivity

Businesses with

NPS above market

IMIX

Share of new digital

retail products (P/C)

2018

5%1

13%

94%

100%

3.0%

2018

75%

<11%-p

60%

72%

~100%

6M 16

-0.8%1

12.0%2

94.9%

34%2,3

2.6%4

6M 16

50%5

12%-p

63.1%

68%5

<10%5

1) 6M 16: Growth rate of annualized EPS for 6M 16 vs. EPS for FY 2015; Ambition for 2018: 3-year CAGR. Annualized figures are not a forecast for full year numbers

2) RoE for 6M 16 annualized. Annualized figures are not a forecast for full year numbers

3) Weighted by average equity (total equity excluding unrealized gains/losses on bonds (net of shadow DAC) and deducting goodwill)

4) Figure presented excluding the effects from the Korean life business

5) Based on latest available data

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Glossary (1)

41

AFS Available-for-sale: Securities which have been acquired neither for sale in the near term nor to be

held to maturity. Available-for-sale investments are shown at fair value on the balance sheet.

AGCS Allianz Global Corporate & Specialty

AllianzGI Allianz Global Investors

AM Asset Management – AM segment

APE Annual premium equivalent: A measure to normalize single premiums to the recurring premiums.

It is calculated as sum of recurring premiums and 10% of single premiums.

APR

Accident insurance with premium refund: Special form of accident insurance (in German:

“Unfallversicherung mit garantierter Beitragsrückzahlung” (UBR)) where the policyholder,

in addition to insurance coverage for accidents (accident insurance), has a guaranteed claim to

refund from premiums on the agreed maturity date or in the event of death (endowment insurance).

AuM Assets under management are assets or securities portfolios, valued at current market value, for

which Allianz Asset Management companies provide discretionary investment management decisions

and have the portfolio management responsibility. They are managed on behalf of third parties as well

as on behalf of the Allianz Group.

Net flows: Net flows represent the sum of new client assets, additional contributions from existing clients,

including dividend reinvestment, withdrawals of assets from, and termination of, client accounts and

distributions to investors.

Market and dividends: Market and dividends represents current income earned on, and changes in fair

value of, securities held in client accounts. It also includes dividends from net investment income and

from net realized capital gains to investors of open ended mutual funds and of closed end funds.

AWP Allianz Worldwide Partners

AY LR Accident year loss ratio – please refer to “LR” (loss ratio)

AZ Allianz

Bps Basis points = 0.01%

CEE Central and Eastern Europe excluding Russia and Ukraine 38

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42

CIR Cost-income ratio: Operating expenses divided by operating revenues

CO Corporate and Other – CO segment

CR Combined ratio: Represents the total of acquisition and administrative expenses (net), excluding one-off effects

from pension revaluation, and claims and insurance benefits incurred (net) divided by premiums earned (net).

Current yield Represents interest and similar income divided by average asset base at book value (excluding income from

financial assets and liabilities carried at fair value); current yield on debt securities adjusted for interest

expenses; current yield on debt securities including cash components.

DAC Deferred acquisition costs: Expenses of an insurance company which are incurred in connection with the

acquisition of new insurance policies or the renewal of existing policies. These typically include commissions

paid and the costs of processing proposals.

Economic reinvestment yield The economic reinvestment yields reflects the reinvestment yield including F/X hedging costs for non-domestic

hard currency F/X bonds as well as expected F/X losses on non-domestic emerging markets bonds in local

currencies. The yield is presented on an annual basis.

EIOPA European Insurance and Occupational Pensions Authority

EPS Earnings per share: Ratio calculated by dividing the net income for the year attributable to shareholders by the

weighted average number of shares outstanding (basic EPS). In order to calculate diluted earnings per share,

the number of common shares outstanding and the net income for the year attributable to shareholders are

adjusted by the effects of potentially dilutive common shares which could still be exercised. Potentially dilutive

common shares arise in connection with share-based compensation plans (diluted EPS).

ER Expense ratio: Acquisition and administrative expenses (net), excluding one-off effect from pension revaluation,

divided by premiums earned (net).

F/X Foreign exchange rate

FFIC Fireman’s Fund Insurance Company

FIA Fixed index annuity: Annuity contract whereby the policyholder is credited based on movements in stated

equity or bond market indices with protection of principal.

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Glossary (3)

43

FV Fair value: The price that would be received to sell an asset or paid to transfer a liability in an orderly

transaction between market participants at the measurement date.

FVO Fair value option: Financial assets and liabilities designated at fair value through income are measured at

fair value with changes in fair value recorded in the consolidated income statement. The recognized income

(net) includes dividends and interest income of the financial instruments. A financial instrument may only be

designated at fair value through income at inception and cannot be subsequently changed.

Goodwill Difference between the cost of acquisition and the fair value of the net assets acquired.

Government bonds Government bonds include government and government agency bonds.

GPW Gross premiums written – please refer to “Premiums written/earned” as well as “Gross/Net”

Gross/Net In insurance terminology the terms “gross” and “net” mean before and after consideration of reinsurance

ceded, respectively. In investment terminology the term “net” is used where the relevant expenses

(e.g. depreciations and losses on the disposal of assets) have already been deducted.

Harvesting rate (Realized gains and losses (net) + impairments on investments (net)) / average investments and

loans at book value (excluding income from financial assets/liabilities carried at fair value)

Held for sale A non-current asset is classified as held for sale if its carrying amount will be recovered principally through

sale rather than through continuing use. On the date a non-current asset meets the criteria as held for sale,

it is measured at the lower of its carrying amount and fair value less costs to sell

IFRS International Financial Reporting Standards. Since 2002, the designation IFRS applies to the overall framework

of all standards approved by the International Accounting Standards Board. Already approved standards will

continue to be cited as International Accounting Standards (IAS).

IMIX The Inclusive Meritocracy Index (IMIX) measures the progress of the organization on its way towards

Inclusive Meritocracy. The internal index is subsuming 10 Allianz Engagement Survey (AES) items around

leadership, performance and corporate culture.

Internal growth Enhances the understanding of our total revenue performance by excluding the effects of

foreign currency translation as well as of acquisitions and disposals.

KPI Key performance indicator

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Glossary (4)

44

L/H Life and health insurance – L/H segment

L/H lines of business Guaranteed savings & annuities: Guaranteed savings and annuities are life insurance obligations that always

relate to the length of human life. Life obligations may be related to guarantees offering life and / or death

coverage of the insured in the form of single or multiple payments to a beneficiary.

Capital-efficient products: Products that use the general account and provide significantly reduced market

risk either by full asset-liability matching of the guarantee or by significantly limiting the guarantee and hybrids

investing in a separate account (unit-linked) and the general account. Capital-efficient products also have a

guaranteed surrender value with limited risk, e.g. due to the implementation of exact asset-liability matching or

the inclusion of a market value adjustment.

Protection & health: Protection and health insurance covers different risks which are linked to events affecting

the physical or mental integrity of a person.

Unit-linked without guarantees: Conventional unit-linked products are those where all of the benefits

provided by a contract are directly linked to the value of assets contained in an internal or external fund held by

the insurance undertakings. Performance is linked to a separate account and the investment risk is borne by

the policyholder rather than the insurer.

L/H OEs with RoE ≥10% Weighted by equity (total equity excluding unrealized gains/losses on bonds (net of shadow DAC) and

deducting goodwill) – please also refer to Return on equity (RoE).

L/H operating profit sources The objective of the Life/Health operating profit sources analysis is to explain movements in IFRS results by

analyzing underlying drivers of performance on a L/H segment consolidated basis.

Loadings & fees: Includes premium and reserve based fees, unit-linked management fees and policyholder

participation on expenses.

Investment margin: Is defined as IFRS investment income net of expenses less interest credited

to IFRS reserves less policyholder participation.

Expenses: Includes commissions, acquisition and administration expenses.

Technical margin: Comprises risk result (risk premiums less benefits in excess of reserves less policyholder

participation), lapse result (surrender charges and commission clawbacks) and reinsurance result.

Impact of change in DAC: Includes effects of change in DAC, URR and value of new business acquired.

It is the net impact of deferral and amortization of acquisition costs and front-end loadings on operating profit.

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Glossary (5)

45

LatAm Latin America: South America and Mexico

LoB Line of business

LR Loss ratio: Claims and insurance benefits incurred (net) divided by premiums earned (net).

Loss ratio calendar year (c.y.) includes the results of the prior year reserve development in

contrast to the loss ratio accident year (a.y.).

MCEV Market consistent embedded value: A measure of the consolidated value of shareholders’ interests

in the covered business. It is defined as the excess of market value of assets over market value of

liabilities as of valuation date. Therefore, MCEV excludes any item that is not considered shareholder

interest such as the Going Concern Reserve and Surplus Fund.

NatCat Accumulation of claims that are all related to the same natural or weather / atmospheric event during

a certain period of time and where AZ Group's estimated gross loss exceeds EUR 20mn or if event is

of international media interest.

NBM New business margin: Performance indicator to measure the profitability of new business in Life/Health.

It is calculated as value of new business divided by present value of new business premiums.

Non-controlling interests Parts of the equity of affiliates which are not owned by companies of the Allianz Group.

NPE Net premiums earned – please refer to “Premiums written/earned” as well as “Gross/Net”

NPS Net promoter score: A measurement of customers’ willingness to recommend Allianz.

Top-down NPS is measured regularly according to global cross industry standards and

allows benchmarking against competitors in the respective markets.

OE Operating entity

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Glossary (6)

46

OP Operating profit: Earnings from ordinary activities before income taxes and non-controlling interests in

earnings, excluding, as applicable for each respective segment, all or some of the following items:

Income from financial assets and liabilities carried at fair value (net), realized gains/losses (net), impairments

on investments (net), interest expenses from external debt, amortization of intangible assets, acquisition-

related expenses, one-off effects from pension revaluation and profit/loss of substantial subsidiaries held for

sale, but not yet sold.

Own funds Regulatory solvency capital eligible for covering the regulatory solvency capital requirement.

P/C Property and casualty insurance – P/C segment

PHP Policyholder participation

PIMCO Pacific Investment Management Company Group

Premiums written/earned

(IFRS)

Premiums written represent all premium revenues in the respective year. Premiums earned represent

that part of the premiums written used to provide insurance coverage in that year.

In the case of life insurance products where the policyholder carries the investment risk (e.g variable

annuities), only the part of the premiums used to cover the risk insured and costs involved is treated as

premium income.

PVNBP Present value of new business premiums: The present value of future premiums on new business written

during the period discounted at reference rate. It includes the present value of projected new regular

premiums plus the total amount of single premiums received.

Reinsurance An insurance company transfers part of its insurance risk assumed to another insurance company.

Retained earnings In addition to the reserve required by law in the financial statements of the Group parent company,

this item consists mainly of the undistributed profits of Group entities and amounts transferred from

consolidated net income.

RfB Reserves for premium refunds (“Rückstellung für Beitragsrückerstattung”): That part of the surplus to

be distributed to policyholders in the future. This refund of premiums is made on the basis of statutory,

contractual, or company by-law obligations, or voluntary undertaking.

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Glossary (7)

47

RoE Return on equity Group: Represents net income attributable to shareholders divided by the average

shareholders’ equity excluding unrealized gains/losses on bonds (net of shadow DAC) at the beginning

and at the end of the period.

Return on equity L/H OE: Represents net income divided by the average total equity excluding

unrealized gains/losses on bonds (net of shadow DAC) and deducting goodwill at begin of the

period and at end of the period.

RoRC Return on risk capital

Run-off ratio Run-off ratio is calculated as run-off result (result from reserve releases in P/C business)

in percent of net premiums earned.

SII Solvency II

SII capitalization Ratio indicating the capital adequacy of a company comparing own funds to SCR

SCR Solvency capital requirement

SE Societas Europaea: European stock company

Share of new digital retail

products

New digital products are conveniently available online at each step of the customer journey,

i.e. fast quote, easily purchasable online, online serviced (incl. policy correspondence, policy admin,

claims). In scope is P/C retail and small and medium-sized entities, all channels. The share of products

is weighted by revenues.

Statutory premiums Represent gross premiums written from sales of life insurance policies, as well as gross receipts

from sales of unit-linked and other investment-oriented products, in accordance with the statutory

accounting practices applicable in the insurer’s home jurisdiction.

Total equity Represents the sum of shareholders’ equity and non-controlling interests.

Total revenues Represent the sum of P/C gross premiums written, L/H statutory premiums,

operating revenues in AM and total revenues in CO (Banking).

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Glossary (8)

48

UFR Ultimate forward rate: The estimate of the ultimate forward rate is defined in line with the EIOPA

methodology and guidelines. An extrapolation is needed past last available market data points.

The UFR is determined for each currency using macro-economic methods, the most important factors

being long-term expected inflation and real interest rates. Although the UFR is subject to revision, it

should be stable and only change when there are fundamental changes to long-term expectations.

UL Unit-linked – please refer to “L/H lines of business”

Unrealized gains/losses (net)

(as part of shareholders’ equity)

Include primarily unrealized gains and losses from available-for-sale investments net of tax and

policyholder participation.

URR Unearned revenue reserve: The unearned revenue reserve contains premium components referring

to future periods, which are reserved and released over the lifetime of the corresponding contracts.

VA Variable annuity: The benefits payable under this type of life insurance depend primarily on the

performance of the investments in a mutual fund. The policyholder shares equally in the profits

or losses of the underlying investments.

VNB Value of new business: The additional value to shareholder created through the activity of writing new

business. It is defined as present value of future profits after acquisition expense overrun or underrun,

minus time value of financial option and guarantees, minus risk margin, all determined at issue date.

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Disclaimer

These assessments are, as always, subject to the disclaimer provided below.

Forward-looking statements

The statements contained herein may include prospects, statements of

future expectations and other forward-looking statements that are based

on management's current views and assumptions and involve known and

unknown risks and uncertainties. Actual results, performance or events

may differ materially from those expressed or implied in such forward-

looking statements.

Such deviations may arise due to, without limitation, (i) changes of the

general economic conditions and competitive situation, particularly in the

Allianz Group's core business and core markets, (ii) performance of financial

markets (particularly market volatility, liquidity and credit events) (iii) frequen-

cy and severity of insured loss events, including from natural catastrophes,

and the development of loss expenses, (iv) mortality and morbidity levels and

trends, (v) persistency levels, (vi) particularly in the banking business, the

extent of credit defaults, (vii) interest rate levels, (viii) currency exchange

rates including the Euro/U.S. Dollar exchange rate, (ix) changes in laws and

regulations, including tax regulations, (x) the impact of acquisitions, including

related integration issues, and reorganization measures, and (xi) general

competitive factors, in each case on a local, regional, national and/or global

basis. Many of these factors may be more likely to occur, or more

pronounced, as a result of terrorist activities and their consequences.

No duty to update

The company assumes no obligation to update any information or forward-

looking statement contained herein, save for any information required

to be disclosed by law.

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